Maruti Suzuki India has hired consulting firms KPMG and PricewaterhouseCoopers (PwC) to advise its suppliers on how to survive the current slowdown in the auto segment. The firms advised the suppliers on how to efficiently run their operations in such turbulent times.
KPMG and PwC told vendors how to survive the slump as well as the reasons for the slowdown at a meeting organised by Maruti Suzuki Suppliers Welfare Association on Wednesday, as mentioned in a report in Livemint. This move also indicates that the company is bracing for a prolonged slowdown.
A person in the know told the daily that KPMG and PwC said that the suppliers should aggressively take stock of their financial operations and focus on cash conversion cycles, convert fixed cost to variable ones and monetise fixed assets such as warehouses. They also advised the supplier to cut costs in the right places and review planned manufacturing to survive the slump.
The consulting firms also asked suppliers to have a 'clean sheet' or start re-planning for every cost item. They also urged the suppliers to collaborate with competitors to improve capacity utilisation. Re-skilling their workforce was also advised by the firms.
PwC had earlier also been hired by European automakers to advise their suppliers during the financial downturn in 2008-10. Maruti decided to take a leaf out of their books and implement the same measure.
Automobile sales in India crashed by 23.5 per cent in August, the worst ever decline in a month on a year-on-year basis since the time industry body Society of Indian Automobile Manufacturers (SIAM) has been collating data from 1997-98.
In August 2019, overall sales stood at 18,21,490 units against 23,82,436 units in the same month last year. In absolute volume terms, sales have also fallen on a month-on-month basis since May when 20,86,358 units were sold.